A week after reporting surpris ingly strong financial results, including a swing back to profitability, Martha Stewart Living Omnimedia has wielded the ax, cutting 25 people from its payroll this week, sources confirmed yesterday.

The cutbacks at Martha Stewart‘s company have come across the merchandising, media and corporate ranks.

Morale, which took a tumble when CEO Susan Lyne left last month, has slumped even further, according to one insider.

In a conference call with analysts on Wednesday, new co-CEO Wenda Harris Millard said that the company no longer planned to fund staffing for broadcast development, and instead will focus on existing broadcasting offerings, including “The Martha Stewart Show,” “Everyday Food” and Stewart’s radio efforts on Sirius.

As a result, Sheraton Kalouria, a former NBC and ABC executive, is out as president of broadcasting, news that was first reported yesterday by Women’s Wear Daily.

The company yesterday also shuffled the deck internally, apparently in a bid to drive more group ad sales at its magazines.

Sally Preston, who had been the publisher of Martha Stewart since 2005, now becomes a group publisher taking on the pocket-size Everyday Foods, as well.

While both titles appeared to be performing reasonably well earlier in the year, they have collapsed dramatically this summer.

The July/August issue of Everyday Foods was down 20 percent in ad pages, and is off 16 percent year-to-date to 321 pages, according to Media Industry Newsletter.

The flagship magazine also tumbled 20 percent in pages with its August issue, and is now down 4.4 percent for the year to 804 ad pages, according to MIN.

Preston will be taking over publishing responsibility on that title from Amy Wilkins, who will now be working on the spin-off Martha Stewart Weddings.

Jane Bruce, who joined the company when it purchased her Body+Soul magazine, now takes over the wholeliving.com portal.

Martha Stewart Living’s stock closed down 2 cents to $7.79.

Mad dash

Companies are scrambling to get out some good news ahead of the Audit Bureau of Circulations’ dismal report on the first half of the year, which is scheduled to be released Monday.

OK! magazine said it expects to be a big standout with a 19.4 percent increase in newsstand sales for the first half of 2007, selling an average of 500,520 copies a week. Subscriptions are also up.

But the success comes with a steep price tag and an ocean of red ink.

Last year, the maga zine was said to have lost nearly $35 mil lion, according to fig ures released by the London-based par ent Northern & Shell.

Led by Richard Desmond, the pub lishing empire in cludes London pa pers the Daily Express and the Daily Star as well as the magazine New!.

The losses in the US have prompted some rivals to wonder if there is a limit to the money that Desmond wants to lavish on the American operation.

US Publisher Tom Morrissy insisted that everything is moving in the right direction on the advertising and circulation fronts, and that the home office is happy.

“This is a long-term commitment,” he said. “We’re a highly-capitalized company with no debt.”

While he had earlier pre dicted the magazine would be profitable in 2008, Morrissy seems to have moved the goal post back a little.

“We’re going to achieve profitability within the next year,” he said.

Overall circulation, including subscriptions, will be up 12 percent to 905,015, and advertising is also up by double-digits.

QSP sale

In the past, when children came home from school hawking magazine subscriptions, candy bars or gift wrapping, one could usually blame it on Reader’s Digest.

Not anymore.

As of yesterday, Reader’s Digest Association sold off its QSP division, which does fundraising for schools and youth groups, to Time Inc.

The publishing giant said it is buying QSP for $110 million and keeping company president Kerry Hatch along with the 360 field representatives, who work largely on commission, and 50 top managers.

For the moment, the managers will remain based in Pleasantville, NY, where RDA has its headquarters.

The sale comes only days after Time Warner, Time Inc.’s parent company, singled out Time Inc. as a drag on corporate earnings.

And the acquisition would appear to be a sharp departure from the recent pronouncements from Time Inc. CEO Ann Moore, who has been busy pushing digital initiatives for Time, Sports Illustrated, People and other major magazines.

The newly acquired company will report to Brian Wolfe, Time’s senior vice president of consumer marketing, and will continue to sell subscriptions from all publishers.

Shake-up

For the second time in a little over a year, the Daily News is shaking up the top job on its Web site.

It appears that News Web site Editor Adam Berkowitz was promoted out of his job last Friday, relegated to a senior editor post working on special projects, sources tell Media Ink.

Starting out as an assistant sports editor before working his way onto the Web site, Berkowitz replaced longtime Web site editor Kevin Hayes, a 19-year News veteran who oversaw two redesigns of the site during his Web tenure.

Hayes took a buyout and is now a digital consultant. The Web staff got the word about Berkowitz from high-paid British import Steve Lynas.

Cohen, who has al ready arrived at the Daily News offices, declined comment.

Lynas didn’t return a call by presstime.

The move comes just days after the paper shuttered its Long Island bureau and laid off the two reporters who were working there, Brian Harmon and Richard Weir.

A Daily News spokeswoman did not return calls seeking comment.

Thanks, P

Careful watchers of Paris Hilton‘s video aimed at presidential candidate and “old white-haired dude” Sen. John McCain noticed that the slinky celebrity was reading a copy of the August issue of Condé Nast Traveler as she launched into a retort to a campaign ad run by McCain.

The Republican candidate’s campaign had released an ad in which he likened Sen. Barack Obama to pop celebrities Britney Spears and Hilton after the Democratic presidential candidate’s European tour elicited a widespread outpouring of popular support overseas.

Hilton’s response was run by the Web site funnyordie.com.

The video has generated more than 5.3 million hits, not to mention pick-up on “Good Morn ing America,” the “Today” show and cable news.

Condé Nast Traveler was so impressed with the unexpected publicity that it sent a mock-up thank you cover to Hilton.